“The Wellington Management Company, one of the nation’s oldest and most respected money management firms and an adviser to more than a dozen funds offered by the Vanguard Group, is under investigation by officials at the Securities and Exchange Commission,” writes Gretchen Morgenson in today’s New York Times.

“The investigation suggests that the mutual fund scandal may not only be expanding, but may also be threatening to touch Vanguard, the nation’s second-largest fund company and one of the most trusted names in mutual funds.”

” ‘We were informed by the S.E.C. that it had initiated an investigation relating to our trading practices and procedures,’ said Lisa D. Finkel, a spokeswoman for Wellington. ‘We do not believe it has to do with market timing and late trading.’ “

“Ms. Finkel declined to provide additional information, like which of the firm’s practices were under scrutiny or whether trading in Vanguard funds was an issue.”

“A broad examination of Wellington’s trading practices would appear to encompass all the firm’s clients, including banks, insurance companies, endowments and 95 mutual fund companies. As of March 2004, Wellington managed $416 billion in stock and bond portfolios for approximately 1,000 clients.”

“Wellington acts as investment adviser to 250 mutual fund portfolios, including 13 Vanguard Funds with $100 billion in assets. Some of the nation’s largest funds – Vanguard’s Wellington Fund, with $29.6 billion in assets, and the Windsor Fund, with assets of $18.7 billion – are managed by Wellington. The firm also manages funds offered by ING, Hartford Financial Services and the Enterprise group of funds.”

“The S.E.C., as is its custom, declined to comment on its investigation. A Vanguard spokesman said that he was not aware of the Wellington inquiry.”

“The investigation of Wellington was the subject of discussion when the firm met in recent weeks with one of its public pension clients, the Policeman’s Annuity and Benefit Fund of Chicago. Wellington was under consideration to be one of the Chicago fund’s bond managers, but the fund’s pension consultant advised waiting until the investigation of Wellington was resolved before awarding business to the firm.”